Appendix 20: Innovation Strategy
嚜澤ppendix 20: Innovation Strategy
RIIO-ED2 Business Plan 2023 每 2028
2 | RIIO-ED2 Business Plan 2023 每 2028
1.
FOREWORD
3
2.
BUILDING ON STRONG FOUNDATIONS
4
2.1 Our innovation journey
4
2.2
Innovation as part of the corporate vision
6
2.3
How we have evolved our approach to innovation
10
2.4
Our innovation track record
14
3
STAKEHOLDER ENGAGEMENT TO SHAPE OUR RIIO-ED2 STRATEGY
15
3.1
Our range of stakeholders
15
3.2
Engaging with stakeholders to develop our strategy
15
4
OUR INNOVATION STRATEGY FOR RIIO-ED2
21
4.1
How our role in innovation is changing
21
4.2
Our focus for innovation in RIIO-ED2
23
4.3
Our strategic pillars
29
4.4
Innovation embedded in our business plan
32
5
HOW WE INNOVATE TO MEET OUR CUSTOMERS NEEDS
33
5.1
How we innovate
33
5.2
Innovation delivery lifecycle
34
5.3
Idea generation - sourcing innovation ideas
35
5.4
Idea Review
36
5.5
Transitioning innovation to Business As Usual
38
5.6
Reporting and benefits realisation
39
5.7
Bringing third parties in
42
5.8
Fast following others
42
6
Annexe
44
6.1
Innovation as part of our day-to-day business
44
6.2
RIIO-ED1 smart solutions
45
6.3
RIIO-ED2 stakeholder engagement Line of sight
50
6.4
EIC Partnership overview
57
2
3 | RIIO-ED2 Business Plan 2023 每 2028
Since 2014 we have been publishing our Innovation Strategy, setting out our focus for innovation, our approach, and how we
are responding to the feedback we are receiving from stakeholders. Innovation is part of our DNA, and is fundamental to
how we operate, all the way from our CEO to our front-line staff. Innovation is a driving force behind our performance,
ensuring that we are and will continue to be the safest, most reliable and cost-efficient network operator in the UK. We have
been on a continuous journey of learning and growth and have built an industry-leading track record of successfully
undertaking and delivering innovation projects which deliver benefits to our organisation and customers - ?284m from 50
solutions.
The challenge ahead of us in the coming decade is to play our part in facilitating Net Zero and achieving the UK*s legally
binding emissions reduction target by 2050. This is fundamentally a whole society challenge, and the energy industry will
need to play a key role in enabling change across society. It is driving us to innovate more! Our stakeholders have told us
we should innovate more to help tackle this challenge so we are increasing our typical annual innovation spend from ?15m
to ?23m, with ?42.5m over RIIO-ED2 allocated to net zero and the energy system transition.
Historically, innovation in networks has focussed on finding new ways to deliver traditional network outputs for customers,
driving efficiencies to reduce bills for the consumer and new ways of working to improve service and performance. Along
with the challenges we face that span the entire industry and beyond we still need to keep innovating to improve our core
business. Our stakeholders agree and we are allocating ?27.5m of funding from our shareholders and ring-fenced within our
totex allowance to continue to optimise our assets and our practices proactively. As our innovation culture has matured and
we have continually demonstrated the return that investing in innovation brings it is an easy shift to reduce our reliance on
innovation funds.
For RIIO-ED2 we will be changing our focus for innovation, adopting industry-wide themes of Net Zero, Flexibility and
Commercial Evolution, Whole Energy System, and Consumer Vulnerability. Led by our stakeholders we have added Data
and Digitalisation as a sixth theme, as evidenced in section 3 of this document.
We will continue to be the most innovative network in the industry. By leveraging our mature innovation culture, processes,
frameworks and experience of deploying innovation into business-as-usual we will deliver more benefits to customers than
we did over five years of RIIO-ED1. Up to 2020/21 we have delivered ?133m totex savings from a total of ?284m benefits.
We have reduced our totex request in this business plan by ?137m, 21% more than the average of the first 5 years of RIIOED1. We will diligently report these benefits using the new Energy Networks Association (ENA) benefits measurement
framework.
We will need to collaborate more widely, working with a wider range of stakeholders, including regional stakeholders and
other network companies, to attract ideas and deliver projects together. We will seek collaborators to bid into the new
Strategic Innovation Fund, we will build on existing relationships including a strategic collaboration with Scottish & Southern
Electricity Networks (SSEN) on faults innovation, a strategic regional collaboration with SGN on whole energy systems, and
continue to support new and small innovators through the Energy Innovation Centre (EIC).
Our refreshed Innovation Strategy comes at a time when the opportunities and the challenges facing electricity distribution
have never been greater. Our strategy sets out why we innovate; how we innovate; our performance so far and our
ambitious plans for the future. This is shaped around how you, our stakeholders, have informed and guided our plans.
We are encouraged by the volume of ideas that come through our innovation pipeline and the vast portfolio of projects that
continue to grow. We welcome your view on the direction we are heading and the challenges we are addressing. Please
continue to get in touch 每 innovation@ukpowernetworks.co.uk 每 share with us your ideas, challenge our approach and
continue to hold us to account.
3
4 | RIIO-ED2 Business Plan 2023 每 2028
In this section we detail:
2.1
2.2
2.3
2.4
Our innovation journey in RIIO-ED1
Innovation as part of our corporate vision and culture
How we evolved our approach to innovation
Our innovation track record
2.1 Our innovation journey
Our first innovation strategy was published in 2014, setting out our leading role in respect of innovation for the RIIO-ED1
period. Our vision was clear. We wanted to be the most innovative DNO working on cutting edge projects guided by our
stakeholder needs. From the outset we believed that innovation would play a crucial role in providing us with the flexibility to
respond better, faster and more cost-efficiently to the changing requirements of our customers.
In 2017, we refreshed our innovation strategy to ensure that our priorities were ambitious and to reflect feedback that we had
received from stakeholders trying to engage with us for idea and project development. Alongside this, we improved our own
processes and procedures and undertook a total refresh of the way we innovate at UK Power Networks. We were driven by
our desire to make it easier and more accessible for customers, companies, innovators, and general stakeholder to engage
and collaborate with us.
Our most recent innovation strategy was published in January 2020, at a time when the opportunities and challenges facing
electricity distribution have never been greater. The strategy focused on our ongoing approach to react to customers* needs
and desire to continue to innovate in order to make our service more reliable, more affordable, easier to connect to, cleaner
and safer.
Following the above changes and our laser sharp focus on outcomes-based innovation, we now have a culture of innovation
embedded throughout our organisation. Our talented, dedicated and highly collaborative innovation team underpin this
culture, and work as one with teams across our organisation and with third parties on projects that deliver practical value and
outcomes for our customers.
We have been on a journey of continuous learning and growth since our first innovation strategy in 2014. Throughout this
journey, we have developed an industry leading track record of successfully undertaking and delivering innovation projects
which deliver savings to our organisation and customers. We believe that our innovation journey to date, guided by our
innovation strategies, has set the foundation, and building blocks to allow us to successfully fund more innovation through
our business-as-usual activities. We now have the opportunity to reduce our reliance on stimulus funding for near term
asset-based innovation, where the benefits accrue to UK Power Networks and our connected customers. The refreshed
Innovation Strategy for RIIO-ED2 as laid out in this document additionally provides us the opportunity to welcome wider
social challenges into the innovation culture such as consumer vulnerability, which will deliver benefits directly to our
communities.
5 | RIIO-ED2 Business Plan 2023 每 2028
Figure 1: Our innovation journey
2014 Innovation Strategy
Our first Innovation strategy was published
in 2014. We wanted to be the most
innovative DNO, working on cutting edge
projects guided by our stakeholder needs.
This strategy set the foundation for the
development of our innovation culture
throughout RIIO-ED1.
2017 Innovation Strategy
In 2017, we refreshed our strategy to improve
the way that we engaged with stakeholders
for ideas and project development.
We also refreshed the way that our
innovation was deployed into business as
usual by setting up a Smart grid team in our
asset management department including
changes to our processes and procedures,
making it easier for our stakeholders to
collaborate with us. Innovation was
embedded to our corporate vision.
2020 Innovation Strategy
We re-defined our innovation focus
areas in response to changing energy
system and customers* needs. We set
up 3 key innovation pillars: Efficient and
effective; Net Zero Ready; Future
Ready.
At this stage, we had already delivered
?232m savings through innovative
solutions in RIIO-ED1. A culture of
innovation had been developed
throughout our organisation and we
had received 34 industry awards for
innovation.
RIIO-ED2 Innovation Strategy
We are now focussing on collaboration, adopting
the shared ENA network innovation themes as a
base.
We are increasingly taking the risk of asset based
innovation upon our business, and focussing
stimulus funding on wider societal challenges,
demonstrating our maturity in this space.
To further aide consistent transparency of the
benefits innovation delivers to our customers we
co-developed a common benefits measurement
process with the gas and electricity network
operator members of the EIC, including also
measuring Social Return on Investment benefits.
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